Jan. 05--OAKLAND, CA-- Following a historic year of wildfires and multiple devastating blazes across the state, property owners in fire-prone areas, including in the Bay Area, are finding it increasingly difficult to get affordable insurance, and in some cases, any policies at all, according to a state report released Thursday.
Several major insurers have stopped writing new policies or renewing plans in the state's regions that are apt to have devastating conflagrations, the California Department of Insurance report found.
"Insurers are increasingly using computer models to assess the risk of fires for individual homes and deciding that homes in some areas face too high a risk," said Insurance Commissioner Dave Jones. "In the wake of last year's wildfires, we may see more areas of the state where insurers decline to write. The Legislature has given insurers broad latitude to decide whether and where to write fire insurance, therefore we are recommending new laws to improve fire insurance availability."
In the last two years, the state insurance department has seen an increase in complaints, evidence and feedback from consumers, consumer groups, public officials and stakeholders that homeowners insurance in those areas is "increasingly difficult to obtain and, if available, is unaffordable to many that need it," the report found.
Between 2010 and 2016, the most fire-prone ZIP codes made up more than 60 percent of these complaints, while only encompassing 38 percent of the state population. Non-renewals have gone up over a two-year period, according to a survey of residential property insurers.
The state office found examples of homeowners seeing their annual premiums of $800 to $1,000 jump to $2,500 to $5,000.
"Now, with the recent 2017 wildfires that have caused many fatalities and destruction of thousands more structures, we can expect that the insurance issues will only worsen," according to the report.
In the Oakland hills, residents have seen such increases, according to resident Sue Piper, who lost her home in the 1991 Oakland hills fire. Hartford refused to renew one neighbor's fire insurance in November, Piper said, forcing him to switch to a new carrier that resulted in a $2,000 premium increase.
Piper said another resident's insurance company is recommending an increase in coverage because rebuilding costs are soaring.
While Oakland hills residents are required to clear vegetation around their homes to reduce fire danger, and receive annual inspections, the report found that most insurers don't take such mitigation into consideration when underwriting a policy.
"That is my big fear following the back-to-back devastating Northern and Southern California fires, that the insurance companies will have taken such large hits that they will want to pull out of California for a while," Piper said. "This has tremendous implications. If you can't obtain fire insurance, you cannot get a mortgage -- or you end up having to go to a tertiary insurance company at a very high cost."
Some homeowners are turning to the insurance-of-last-resort, through the FAIR Plan, according to the report.
There are about 3.6 million California homes in the wildland-urban interface, and of those more than 1 million homes sit in the high or very high-risk fire areas, according to the report.
The report recommends a series of new legislation to ensure property owners can still obtain insurance.
The insurance issues peaked after the 2015 Valley and Butte fires in Lake and Calaveras counties destroyed more than 3,000 structures and caused several fatalities and more than $1 billion in insured damages, the report found.
Last year's historic wildfire season, including the deadly Wine Country fires in October, destroyed or damaged more than 14,700 homes and 728 businesses, causing more than $9 billion in insured damages and dozens of deaths.
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